Front-end load
Front-end loads and sales charges on mutual fund investments are fees or commissions paid when investors purchase a mutual fund. The load or sales commission is paid to the advisor or broker who sells the mutual fund to the investor. These types of loads actually reduce the amount of investment into a mutual fund
For example, let's say you have $100,000 and want to invest it in a mutual fund with a 2% front-end load. The $2000 sales load you must pay comes off the top, and the remaining $98,000 will be invested in the fund. The Maximum sales load under the Investment Company Act of 1940 is 9%. The maximum sales load under NASD Rules is 8½%.
Mutual fund values are not guaranteed and individuals can lose money on mutual fund investments. Investors should read the mutual fund prospectus prior to making an investment decisions. Mutual fund purchases should be made taking into consideration an individual’s investment experience, investment objectives, time horizon and risk tolerance level.